The Impact of Cash Transfers on Local Markets: A Case Study of Unstructured Markets in Northern Uganda

This report explores the effects of cash transfers on local markets. It tests the hypothesis that ‘cash transfers to poor households lead to integration of markets in remote areas and strengthen existing well-integrated market systems’. To test the hypothesis, a case study was conducted in Northern Uganda to assess the effect of cash transfers on unstructured markets.

The case study is based on a cash transfer project that Action against Hunger conducted in Otuke County, during the second half of 2009. The project distributed grants, equivalent to approximately US$150, to 1,500 vulnerable households.

This research analyses the impact of the cash transfers on the weekly integrated local livestock markets, finding that they produced a temporary inflation of prices at local level, but that in the long run they did not have negative effects on market integration. The research also analyses the multiplier effects of the cash transfers on different categories of market actors and on other markets such as labour.